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NIH Funds Seen Boosting Industry Patents

U.S. Patent and Trademark Office

U.S. Patent and Trademark Office in Alexandria, Virginia (A. Kotok)

31 March 2017. An analysis of grants issued by National Institutes of Health shows a large percentage of those grants, directly or indirectly, result in patented technologies in industry. The study by management and public health researchers at Harvard Business School, Massachusetts Institute of Technology, and Columbia University appears in the 30 March issue of the journal Science.

National Institutes of Health is the main financial source for life sciences research in the U.S., with a total budget in the current (2017) fiscal year of more than $33 billion. President Trump’s proposed budget for FY 2018 asks for a reduction of $5.8 billion in spending, an 18 percent cut for NIH. Secretary of Health and Human Services Tom Price told a committee of the House of Representatives this week that the cuts would come out of overhead payments to universities, but lawmakers in both parties are complaining about the scale of these reductions.

Danielle Li, a professor of entrepreneurship at Harvard Business School, with management professor Pierre Azoulay at MIT and public health policy professor Bhaven Sampat at Columbia, sought to gauge one economic impact of public spending on life sciences research, the generation of patents by business enterprises from studies funded by NIH. Patents represent a tangible result of the knowledge produced in research, which can be translated into revenues from licensing and royalties for drugs, medical devices, and other biomedical products. For this study, the authors traced NIH funding to patents issued by the U.S. Patent and Trademark Office, or USPTO.

Using natural language processing tools, Li and colleagues examined 365,380 grants funded by NIH from 1980 through 2007. About half of those grants, more than 164,000, supported large renewable research projects, known by the funding code R01. These R01 grants are considered the foundation of NIH’s support, since they often finance the work of entire labs, including postdoctoral researchers and graduate students, for a number of years. The researchers also reviewed nearly 5.3 million patents issued by USPTO between 1980 and 2012, adding another 5 years for research findings to end up in patent documents.

The team found a sizeable effect from NIH funding on patent activity over this period, but largely in indirect ways. The most direct vehicle for turning NIH support into patents is the Bayh-Dole Act of 1980, which gives universities and research institutes the rights to intellectual property produced by studies conducted by their scientists and funded with federal sources. As a result of Bayh-Dole, institutions can file for patents and own the rights for future licensing. Once the initial discoveries are licensed to industry, those enterprises can further develop the findings and file patents for their follow-on technologies.

The researchers in this study focused on patents for industrial technologies, and found only a modest direct output of these patents from NIH funding. The team uncovered 17,093 patents that identified 30,829 NIH grants, about 8 percent of the total, as the source for the research funds leading to discovery or development of private-sector technologies.

The nature of scientific inquiry and discovery however, is rarely direct, with knowledge developed from one scientist often influencing the work of other labs. When adding in all citations of NIH-funded research in patents, the researchers found 81,462 private-sector patents referencing 112,408 NIH grants, or 31 percent of the total.

Another modest output of NIH research is drugs approved by FDA. The team found only 4,414 patents in its sample for FDA-approved drugs directly linked with about 1 percent of NIH grants. When taking in all references to NIH funded research, however, the slice of approved drugs increases to 5 percent. In addition, the analysis found studies considered “basic” or “applied” research had about the same likelihood of appearing in a U.S. patent, leading the authors to conclude, “the basic/applied distinctions may not be so useful in thinking about what types of research funding is more productive.”

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